AICPA’s Business Combinations Accounting and Valuation Guide

Applicability

• All entities with business combination transactions. 

Relevant dates

• Final Business Combinations Accounting and Valuation Guide published by the AICPA on November 22, 2024

Key impacts

The valuation and accounting requirements around business combinations can be complex and nuanced. This guide includes the following accounting topics: 

• Identifying business combination transactions and whether a set of assets meets the definition of a business
• Identifying the acquirer
• Measuring consideration transferred
• Recognizing and measuring identifiable assets acquired, liabilities assumed and any noncontrolling interests
• Recognizing and measuring goodwill or bargain purchase gain.

The guide also includes several valuation topics and detailed illustrative examples, including:

• Assessment of prospective financial information, discount rate, and transaction operating value of the acquiree
• Conceptual guidance on relevant valuation approaches and methods
• Valuation of the most common intangible assets identified and recognized as part of a business combination.

While the guide is focused on US GAAP, the fair value measurement concepts apply regardless of the accounting framework and provide valuable insight into the fair value measurement of intangible assets in general.